Turn key properties

[John Powell]

Hi, I'm curious about areas outside of Arizona? I've been looking at Kansas City, Memphis, and various areas in Ohio. Kansas city is a high interest interest for me based on the amount of cash flow I've seen listed for properties. Has anyone invested primarily in turn key properties and sustained a livable income from such properties? I'm asking from the idea that I'd pay 20 percent down on each home to acquire each property in a grueling manner after due diligence. I am still in school and I'm still learning. My interest is eating me alive. 

[Cliff Harrison]

I considered turnkey also to get started with. But after researching some turnkey houses being offered for sale including inspecting in person and also running comps it became pretty clear that prices are a lot higher than you would pay in buying and fixing, or even buying a good retail deal straight off MLS. I also saw the rent being marketed was really at the top of that neighborhood, and the proforma expenses were artificially very low. There are a lot of opportunities to be marketed out of your potential ROI when going turnkey. I think you might make some modest returns in the long run if you buy turnkey carefully and STAY invested (don't sell - you will take loses) but it will be smaller return if you did not acquire through a profitable turnkey provider unless you make expensive mistakes and then quit do-it-yourself investing. Even a mistake with do-it-yourself, if you don't quit, will teach you something. You will find it very difficult to really crush it with turnkey unless you find some special circumstances (according to me).

Be careful about where you buy property in KC.  Don't go for the highest cash flow areas, in my opinion.   Good luck.